Microsofts mammoth court case
will have long lasting effects on computer industry

The Department of Justice has finally handed down a finding on
Microsofts mammoth court case. In no uncertain terms the DOJ has found that Microsoft may
indeed intend on taking over the world. Well maybe not the world but a large part of the
computer industry. The evidence appears to be overwhelming but Microsoft vows to fight of
course. No matter which way it goes, this landmark case will have long lasting effects on
the computer industry.

This past Friday JudgeThomas Penfield Jackson found that MS was indeed
involved in "monopolist" practices. In his finding, Penfield said, "Most
harmful of all is the message that Microsoft's actions have conveyed to every enterprise
with the potential to innovate in the computer industry. Through its conduct toward
Netscape, IBM, Compaq, Intel, and others, Microsoft has demonstrated it will use its
prodigious market power and immense profits to harm any firm that insists on pursuing
initiatives that could intensify competition against one of Microsoft's core products. The
ultimate result is some innovations that would truly benefit consumers never occur for the
sole reason that they do not coincide with Microsoft's self interest," he said. Judge
Jackson's findings concluded that Microsoft illegally tied Internet Explorer to Windows,
attached illegal conditions in its OEM contracts to lock up a monopoly with the Windows
desktop, employed anticompetitive tactics to crush Netscape Navigator in the browser
market and Sun Microsystems' Java programming language in the development tools market,
stymied Intel's innovations in the Native Signal processing (NSP) software efforts, and
tried to kill Apple QuickTime.

According to early 1999 estimates provided by San Jose, Calif.-based
Dataquest this week, Microsoft now owns more than 96 per cent of new OS shipments on the
desktop and 62 per cent share of new server OS shipments. MS also owns a 64 per cent share
in the browser market. "Microsoft enjoys so much power in the market for
Intel-compatible PC operating systems that if it wished to exercise this power solely in
terms of price, it could charge a price for Windows substantially above that which could
be charged in a competitive market," Jackson wrote. "In other words, Microsoft
enjoys monopoly power in the relevant market."

The case began in mid 1998 when the DOJ and 19 US states charged that
MS was using its popular Windows operating system to crowd out competition and render its
browser rival Netscape useless. In 1997 the DOJ ordered MS to separate its browser from
its operating system. Microsoft responded by offering computer manufacturers three
alternatives: They could take the entirety of Windows 95 as is; license a 2-year-old
version of Windows 95 without the browser and many improvements made since then; or
license a version of Windows 95 that, in Microsoft's own words, would not work. The case
for the DOJ was built on damaging information from MS competitors and from inside MS
through its company emails, company memos and from the mouths of its own executives. The
next step for the DOJ is to hand down a finding of law in early 2000. But Judge Jackson
sent a clear signal to MS to settle or he will the settle the case himself at their great
expense.

Chairman and CEO Bill Gates has vowed to continue to defend and fight
for the right of his company to continue making profits. He has also vowed not to settle
with the DOJ and seems content to let the judicial system run its course. ''We
respectfully disagree with a number of the court's findings. We believe the American legal
system will ultimately affirm that Microsoft's actions were fair and legal and have
brought tremendous benefit to millions of consumers,'' said Gates, "Microsoft
competes vigorously and fairly and is committed to resolving this issue in a fair and
responsible manner."

In the last 5 days since the ruling, MS stock has dropped from 93 to
86. However most analysts expect their stock to continue to be driven by earnings. No
majors drops are expected unless the final rulings in the case cause an undercut in its
present earning models. Since mid 1998 MS stock is up over 110 per cent and its
performance has doubled the Nasdaq index. It has preformed twice as well as any average
Nasdaq stock, and consistently beats its quarterly estimated earnings.

MS has spent a lot of time in US courts throughout its history.
Presently there are several cases pending with Sun Microsystems, Caldera, and Blue
Mountain. Caldera, the makers of DR-DOS charge that MS committed several illegal acts to
push them out of the market place including illegal product tying, making intentional
vaporware announcements, blacklisting developers, and exclusionary licensing. That case
goes to court in January of 2000. Sun Microsystems, owners of JAVA, alleges that MS
violated a licensing agreement by designing a "windows only" version of its Java
programming. And Blue Mountain greeting cards charges that MS placed filters on its
browser email that auto-files its cards into a junk mail folder.

Competition has been, and will continue to be fierce with anything
internet related. Computer companies and internet access providers are already crossing
lines to vie for a piece of the internet pie. The question is whether any government has
the right to interfere with the competition. And does any one company have the right to
capture the lions share of the market just because they can? Is the idealism that everyone
should get a fair chance to compete finally dead? This case will lay the grounds for the
answers to these questions. And given the aggressiveness of the market, more questions
will likely arise. Many more companies will probably end up in court trying to justify
their bottom line...profits. Let's just hope that the consumer will end up winning in the
end since, after all, its their money that the market is fighting over.